Retail giant Currys starts the year robustly amidst intense high street pressures
Currys Reports Robust Start to New Financial Year
Electricals retailer Currys has announced a strong start to its new financial year, with a £50m share buyback programme and a £25m dividend. This positive update comes against a mixed picture for the British high street, as analysts express concerns about slowing wage growth potentially squeezing retailers in the coming months.
Despite these challenges, Currys has managed to reduce its pension deficit significantly. The deficit, which stood at £403m in 2022, has been brought down to £134m. This reduction is a testament to the retailer's financial stability and prudent management.
The company's sales performance has been encouraging as well. UK & Ireland like-for-like revenue rose by 3%, and sales growth has been observed across the UK, Ireland, and Nordics. Cooling products and coffee machines sold strongly throughout the summer months, while double-digit gains have been recorded in newer categories such as gaming, AI computing, and large domestic appliances.
Recurring services remain a bright spot for Currys, with customer credit adoption climbing to 23.3%. The mobile business is also on track to beat its 2.25m target before the year-end, with iD Mobile subscribers surging 22% year-on-year to 2.3m.
CEO Alex Baldock expressed confidence in the company's performance, stating that Currys is on a good track with growing momentum. He mentioned that margins in the UK remained stable despite cost pressures, with higher volumes providing operating leverage. Baldock also stated that he is confident that profit margins will increase again this year.
However, Baldock has been vocal about government policy, warning about potential higher business rates. He has emphasised the need for supportive policies to help retailers navigate these challenging times.
Shares of the company have slipped around 12% since a July peak, but remain nearly 20% higher for the year 2025. Total shareholder returns this year have been set at £75m.
The retailer's website experienced disruption due to overrun maintenance earlier this week, but the impact on overall sales is yet to be determined.
In conclusion, Currys has reported a robust start to its new financial year, with strong sales performance and a reduced pension deficit. The company's focus on recurring services and newer categories, along with its confident outlook, bodes well for its future. However, concerns about slowing wage growth and potential government policies remain challenges that the retailer will need to navigate.
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